TrendFederal money for identity programs boost biometrics market

In announcing major new regulations in January which set national standards for driver’s licenses under the 2005 Real ID Act, DHS secretary Michael Chertoff declared, “This is a great teaching moment on the challenges of really reconfiguring a society.” CongressDaily’s Chris Strohm correctly writes that Chertoff’s announcement was music to the ears of private companies and lobbyists who see major national security benefits, as well as the potential for lucrative contracts and big bucks, in helping government agencies verify individuals’ identity. Federal programs like the one created by Real ID are being promoted by, and helping to boost, an industry which specializes in producing identity documents and collecting biometrics such as fingerprints and iris scans. Real ID does not have a biometrics requirement, but some industry officials think that it eventually will. The estimated value of potential contracts to implement federal identity-solutions programs has more than doubled since 2006, rising from $890 million to $2 billion this year, according to Jeremy Grant, a senior vice president for the Stanford Group, which advises investors. Not surprisingly, several companies vying for a share of the market have plowed money into their lobbying activities — some by hiring former administration officials —according to interviews with industry insiders and a review of federal lobbying records.

The industry, though, faces a backlash from critics who argue that the government is recklessly weaving requirements for biometrics and identity verification into the fabric of the nation’s homeland security without adequate public debate. “There is a little glass dome over the Washington, D.C., Beltway community,” says Jim Harper, director of information policy studies at the libertarian-leaning Cato Institute, “where these contractors and security folks … are absolutely convinced of a growing and mutating and metastasizing terrorist threat — and Congress, meanwhile, has granted them tremendous amounts of money to use any way they can.” Harper says he is particularly worried about how much influence L-1 Identity Solutions would have if it is successful in its bid to acquire Digimarc’s ID Systems business, which is most of Digimarc. The two companies together control more than 90 percent of the driver’s license market in the United States. “That combination will be the premier lobbyist for Real ID, for a national ID law,” Harper says.

On 30 June Digimarc’s board approved a $310 million offer from L-1 Identity Solutions, but the government must approve any final sale. L-1 has kept a relatively low